Thank you for your detailed answers, @elisafly 
Some follow ups:
The key value proposition is that the vault is actively managed and monitored.
Using the Maple investment as an example:
Pros
- Enzyme provided the development resources to create a bespoke integration complete with Chainlink’s Proof of Reserve oracle, so the capital pool could track the price of the Maple deposit. This allowed the Engineering team to have limited involvement, so their resources could be focused elsewhere.
- The Avantgarde team harvested the MPL rewards and swapped them to wETH on a regular basis to capture that value in wETH terms. Your team also deposited the initial wETH in the Maple pool.
Cons
- Between the initial deposit date in August 2022 and the aftermath of FTX (November 2022), the Nexus Mutual community was unaware that the concentration of lenders in the pool had gone from ~5-6 funds to largely just 2 (Orthogonal and Auros) with limited liquidity allocated to the Amber Group and Flow Traders. In the case on actively monitoring this sort of development, members were not aware and once it become well known that the mutual was exposed to these two firms, it was too late to withdraw without sizeable losses to the initial investment.
The above was a unique situation, but defining what active monitoring and management would mean in terms of ETH staking would be helpful. Since natively staked ETH can be fully withdrawn but it’s subject to a queue, which current is ~16 days (Source: rated.network). I imagine this queue for full withdrawals is longer if there are more requests. LSTs can be swapped on the market to access liquidity in lieu of withdrawing, but that can come with it’s own pros/cons.
I think that Enzyme could provide a good solution, but before moving to a formal proposal, some of the specifics on what active montioring and management mean specific to this investment type, how Avantgarde would respond in a situation where risk dramatically increases for a staking provider in a short period of time or if the mutual needs to access liquidity to meet claim obligations would give members a better idea of the value that Avantgarde Treasury can provide.
Smart Contract Risk
Furthermore, Nexus’s exposure is not static and changes constantly so it is necessary for the positions to be actively managed in order not to duplicate risks or take them above threshold. e.g. if tomorrow Nexus sells 20% cover on Rocketpool, and the DAO is already long rETH, Nexus would need to react in order to avoid overshooting the defined risk thresholds. This is an ongoing process that requires efficient active management.
Currently, Nexus Mutual does not provide Protocol Cover or ETH Staking Cover for Rocket Pool. If the mutual had exposure to rETH, those potential lines of business would be more heavily scrutinized, and it’s likely that the available coverage for those types of risk would be limited.
While Rocket Pool isn’t listed, currently Enzyme V4 is listed. That potential for concentration risk would force a decision, imo, that if Enzyme was used to manage a large portion on the capital pool, Enzyme V4 would need to be delisted from Nexus Mutual to avoid overlapping risk exposure.
On that note: I wouldn’t be supportive of allocating 20% of the capital pool to the Nexus Mutual Enzyme vault, as members would have diversified exposure to risk across multiple staking providers or LST protorocols, but it would be a sizeable concentration of risk in the Enzyme smart contracts if an exploit on Enzyme were ever to occur (knock on wood that never happens). At most, I would be comfortable with the amount of ETH currently held in the Enzyme vault, but I would not like to see an increase.
At this point, I’m confident rETH could be held directly in the capital pool and there is now an rETH/ETH oracle available through Chainlink, so the reliable oracle problem has been resolved for Rocket Pool ETH. If members were inclined to see an investment allocation to rETH, available liquidity would be the only real constraint and, if members approved a reasonable allocation through governance, rETH could be purchased through the SwapOperator in the capital pool, with ETH traded for rETH via CowSwap.
If the Enzyme vault were used, it would be largely beneficial to pursue staking options that would not be available due to a lack of a reliable oracle source (this is where Chainlink Proof of Reserve would be beneficial) and which require more complex transactions. Minority staking solutions, where the mutual can advance diversity, while reducing overall fees for the mutual would both help promote geographic, execution client/consensus client, and staking provider diversity and offset the 0.5% management fee for the services provided by Avantgarde.
Overall, it’s an interesting proposal and I’m looking forward to allocating more idle (w)ETH to staking solutions, so more of the capital pool can be made productive. As with anything, the devil is in the details and it’s important for members to understand certain specifics, so they can provide feedback before this moves to a formal Nexus Mutual Protocol Improvement Proposal (NMPIP).
Engineering Support
It would also be beneficial to understand if/how much the Enzyme/Avantgarde Treasury team would need support from the mutual’s Engineering team to move this forward, should members approve this proposal. If you can comment on the potential technical requirements and if the mutual’s Engineering team would need to be involved (and, if so, at what level), that would be an important factor for members to consider, since there’s strong support to prioritize the Tokenomics Revamp initiative.